Secondary Tariffs: A New Weapon in Trump’s Trade Arsenal
On March 29, 2019, US President Donald Trump took a bold step in his ongoing efforts to exert pressure on Venezuela’s embattled government. The President issued an executive order allowing for a 25% tariff to be imposed on any nation purchasing oil and gas from Venezuela. This move, which Trump dubbed “secondary tariffs,” is expected to take effect on April 2, the same day the administration is set to unveil a wider array of levies targeting multiple countries.
Background
The US has been increasingly critical of Venezuela’s government, led by President Nicolas Maduro, who took office in 2013 following the death of Hugo Chavez. The US and other nations have recognized opposition leader Juan Guaido as the legitimate president, citing allegations of election fraud and human rights abuses under Maduro’s regime. The crisis in Venezuela has led to widespread economic instability, with hyperinflation and food shortages affecting the population.
Impact on the US
The secondary tariffs on nations purchasing Venezuelan oil and gas are expected to have a limited impact on the US, as the country is not a significant importer of Venezuelan crude. However, the move could have implications for US refiners that rely on Venezuelan heavy crude. These refiners may have to seek alternative sources of crude, which could lead to higher costs and potential supply disruptions.
- US refiners may have to find alternative sources of heavy crude, which could lead to higher costs.
- The move could disrupt supply chains, potentially leading to higher prices at the pump for American consumers.
Impact on the World
The secondary tariffs on Venezuela’s oil and gas exports could have far-reaching consequences for the global energy market. Venezuela is the world’s largest crude oil reserve holder, and its output has been in decline due to the economic crisis. The tariffs could further reduce the amount of Venezuelan crude available on the global market, potentially leading to higher prices.
- Higher crude prices could have ripple effects on global energy markets and economies.
- Countries that rely on Venezuelan crude, such as China and India, could be impacted by higher prices and potential supply disruptions.
Conclusion
The secondary tariffs on nations purchasing oil and gas from Venezuela are a new weapon in the US’s trade arsenal, aimed at pressuring the embattled government of President Nicolas Maduro. While the impact on the US is expected to be limited, the move could have far-reaching consequences for the global energy market and the economies of countries that rely on Venezuelan crude. As the situation in Venezuela continues to unfold, it will be important for businesses and consumers to monitor developments and adjust accordingly.
The US administration’s actions in Venezuela are part of a larger trend of trade tensions between the US and various nations, including China, Europe, and Mexico. It remains to be seen how other countries will respond to the secondary tariffs and what the long-term implications will be for the global economy.
